Shareholders fume at plodding Jasco

Image courtesy stock.xchnge (bizior)

There were some seriously unhappy shareholders attending the latest Jasco interim results and several gave management a grilling on sticky issues.

These ranged from dividend yield and policy, to a “pathetic share price performance”, a lack of directors’ trade in their own shares, annual report expenses, and a grateful shout-out to new shareholders for “saving the company”.

A small cap analyst says it’s been painful to watch Jasco recently. “Jasco was effectively a good-times company. When economic conditions were favourable, the company made money very easily.

“But when things got vaguely tough, the wheels fell off. And this exposed many poor management decisions that had been made during the party years, such as a ridiculous and unmanageable number of disjointed brands and products, and way too many corporate structures, managers, layers and levels.

CEO Pete da Silva walked into chaos when he took over a few years ago. “He has done a really good job of sorting out the obvious problems and faults” says the analyst. “But even tougher work lies ahead. He now has to leverage and maximise the very good intellectual skills, human capital and product offerings that lie within the group.”

Now at a market cap of R166m at 76 cents a share, it used to trade at over R4 before the financial crisis and its market cap was touching R300m. The number of shares in issue has risen dramatically, diluting shareholder interests.

After two-and-a-half years of intense restructuring, there are only six more months left for cleaning up the mess.

“And then this business has to run” says da Silva. “I would like to see every unit in the group delivering double digit PBIT margins by the end of this financial year.”

Da Silva concludes that the business base is now positioned for growth, financial position has improved, and the full benefits of the three-year restructure will come through in financial year 2015.

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